In 1987 and 1990, serum samples were collected from people living in the two districts (Itahari and Chitwan) of the Terai region of Nepal. Antibodies against Japanese encephalitis (JE) virus in these sera were detected by the hemagglutination inhibition (HI) and neutralization (N) tests. By the HI test, 26 out of 172 (15.1%) sera from Chitwan and 15 out of 137 (10.9%) sera from Itahari showed positive titers. Higher positive rates were shown by the N test, where 46 out of 172 (26.7%) sera from Chitwan and 22 out of 137 (16.1%) sera from Itahari had antibodies against JE virus. A JE strain was isolated from a blood specimen of a pig raised in Kathmandu. When the nucleotide sequence of the pre-M region of the strain was compared to the same region of the other JE virus strains reported, the highest similarity was observed to the strains isolated in Nepal in 1985. These results suggest that the Terai region has been an epidemic area of JE.